5 More Growth Stocks Stuck in the Middle

Have you ever owned a tweener?

A tweener, dear Fool, is like your pal Chuck. Still a great athlete, Chuck no longer rules the hardwood with a 40-inch vertical leap. He's become what we sports addicts call a gamer. He passes more. He's developed a nice shot from the corner. And though he doesn't dunk as much, or as spectacularly, as he did, Chuck is still a force in the paint.

But we fans don't know how long Chuck will be in the starting lineup. Chiseled veteran Abe has a wicked hook shot that won't quit. And Larry, the little guard whose hip-shaking moves smoke defenders, has the makings of a future superstar. Both are vying to cut into Chuck's minutes on the floor.

In Foolish parlance: Chuck is a tweener, Abe is a Rule Maker, and Larry is a Rule Breaker.

Growing up is hard to do
The stock market has plenty of Chucks. They'll either create billion-dollar fortunes as they come to dominate industries, as Cisco, Microsoft, and Google have, or they'll be destroyed in the process, as Gateway was.

Therein lies the problem. Investing in tweeners can be dangerous and exceptionally profitable -- the trick is picking your winners well, as David Gardner has. He produced nine years of 20% average returns hunting for misunderstood multibaggers in the making. His team at Motley Fool Rule Breakers continues the tradition today.

Let's have the list
You, too, can join in the effort, thanks to Motley Fool CAPS. Each week, we'll use the database to find three-star stocks that are expected to boost earnings by at least 15% annually over the next five years. Here's today's list:

Bear in mind that this isn't a list of recommendations. Instead, I offer these stocks as candidates for further research. But of these five, content management specialist Open Text interests me most.

Open Text is like peer Interwoven (NASDAQ:IWOV), which also has been stuck in the middle, in that both firms offer the means to track data that wouldn't classically fit in a database. Email, contracts, and warranties are good examples. For a car dealer or other service business, such documents might account for more than half the data needed to profitably manage day-to-day operations.

Or more. With so much work being performed over the Internet, I sense that it's only a matter of time before every business needs some sort of content management system. Wall Street seems to agree, projecting high growth for Open Text over the next five years, resulting in a mouthwatering 0.67 PEG ratio.

That's not all. Consolidation in the software industry could offer investors a margin of safety by way of a buyout. All-Star CRAZYCAPTAIN explains:

It's only a matter of time before somebody acquires Open Text. They are the largest ECM vendor in the world, and they have proven themselves time and time again. After learning from their mistakes from the IXOS acquisition, they have almost completely integrated Hummingbird's products and services into Livelink. I have no reason to doubt management, and from looking at their deals pipeline, 2007 should be a banner year for them.

Intrigued? Do your own due diligence, then check in with thousands of other investors at CAPS. If you'd like, add your own commentary. You'll be helping your fellow Fools and testing your ideas at the same time. Click here to get started now; the service is 100% free.

See you back here next week for five more growth stocks stuck in the middle.